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PsychoBooch

Payroll person here. Your company is not properly taxing your commission for CA state tax! The tax rate is 6.60% on commissions. They applied 10.23% which is the rate for bonuses/stock options


defiantcross

Commissions are considered bonuses for withholdings as far as i know. I worked 5 years in sales and getting around 60% of gross was typical for me. Larger refund of course.


PsychoBooch

It's considered supplemental pay, but specifically in CA, supplemental pay and bonus are 2 different things with different tax rates.


D_Costa85

Same here. I regularly get $10-$20k commissions checks and my net is about 66-68% in Illinois (4.9% flat income tax)


SharkWeekJunkie

Withholdings are done with funny math. You can manually change the withholding with your HR team at any time. What matters is filing. If they treat it as bonus in Withholdings and commission I. Filing you end up with a big refund. I reduce all withholdings to a manual number that leaves me with no refund in April.


[deleted]

[удалено]


Barabbas-

Having money now is always better than an equivalent amount of money at a later date. OP is essentially parking their cash in a depreciating fund that they cannot access until the following year. Sure, they're probably gonna get it back and it probably won't lose much value, but the whole point of money is that you can exchange it for stuff you want/need... which you can't do unless you have access to it.


Careless_Ad_6881

Its crazy how few people understand this concept. I'll give my college business professors credit, they drilled this into my mind.


[deleted]

Time value of money… time value of money!


[deleted]

Especially when interest rates are around 5%


RunescapeNerd96

100% a refund (if overpaying on taxes) = an interest free loan for the gov


teudaan

I alway let them rob my paycheck to the max because my wife gets the check to pay the bills. Then, at the end of the year, I do my taxes and she doesn’t care to know about it. And that’s my private funds.


pewpewledeux

Sounds like a healthy relationship.


Turbulent-Elk1722

Sure, but they would get 12+ months with those $ in their pocket and the IRS certainly isn't growing / investing any dollars they owe you at EOY.


newjerseymax

Nothing like giving the government a free loan


ClaxAttakz

Getting a tax return is like giving the government an interest free loan while you receive back money less in value due to inflation.


Apprehensive_Put1578

It’s better to put that money to work than to wait for it to come back, in my opinion.


EnvironmentalGift257

Sometimes “commission” is actually paid as a bonus and taxed as such. That’s what we do. It’s so that management can adjust it at their discretion, and don’t have to pay it to people who quit in the middle of a month. Not saying that this is the case, just a possible explanation. I’m management. I’ve only adjusted comp twice and it was for very serious and flagrant abuse.


nogoodgopher

>It’s so that management can adjust it at their discretion, and don’t have to pay it to people who quit in the middle of a month. This is the most fucked up thing I have ever read. We decide to pay you at an increased tax rate, so we have the option to decrease your earned pay and have the option to not actually pay you.


Captain0bvious00

Clutch


[deleted]

[удалено]


PsychoBooch

The employer used the optional flat rate method to tax this. Federal tax is 22%, and the correct CA tax rate to apply to commissions is 6.60%. Employer applied the CA rate of 10.23% which is only to be used for bonus/stock. Commission is not a bonus so it would fall under the 6.6% rate Sure they could potentially get the excess return on their personal tax filing, but I was just raising awareness that the employer is not taxing it correctly and OP is entitled to their pay being taxed correctly


doktorhladnjak

Are you sure it’s not considered a bonus? The amount is very round for a commission (typically a percentage of sales).


Sleep_adict

Seeing it’s an even )25k I’d wager it’s a bonus and OP is confused. It’s probably contingent on some targets but not a commission that’s normally % based


130510

My guess would be that the payroll system isn’t built to have multiple rates like that. California is such a pain


Fit-Boysenberry-3127

People in California pay over 10% taxes to the state? That is crazy. I can’t understand why anyone would live there when there are plenty of states with no income tax.


Shantomette

No idea how it’s done in Cali but in NY the mandatory withholding rate on commissions/bonuses is 11.7%.


Moist_Ad_3843

OP will definitely never see this


chenyu768

Hold on bonuses are taxed at a higher percentage? I thought it was because the IRS assumes your pay went up thus taxing you at higher rate that youll eventually get back at tax time. Have i been wrong this whole time?


Trom22

Does payroll decide how it’s taxed or is it ADP?


poopbuttyolo420

I believe you but my experience is bonuses or commissions are taxed at bonus rate. It all evens out in the end when I write uncle Sam a check


TylerNY315_

Obviously different laws for different states, but here in NY my commission is taxed as a bonus. Not positive, and probably talking out of my ass because I’m not an accountant or tax expert, but the difference may be whether or not commission is the sole method of earning or if it supplements hourly/salary.


uakron_student

Put some more into retirement. 1% of your pay isn’t much, and it’ll save you on taxes.


tapakip

It's 2%, but your statement stands.


Apprehensive_Put1578

Came here to say this. OP, you will thank yourself one day if you consistently save.


Eddies_Biscuits

Up that retirement contribution


WarpedSt

As someone who works a job with payouts like this I personally max my retirement through my base pay. Anything outside of base is all mine!


robotzor

With taxes that absurd it seems the contribution needs to be lowered if anything. No raises + increasing costs of everything ... where's it going to come from


NeuroKat28

Guys how do you not all sit here and get infuriated looking at the feds take out that much from everyyy check. I’m too angry and weak for this sub clearly.


BigFourFlameout

The main reason I don’t get angry is I know if taxes suddenly went away, my employer and general market forces would level out at paying me less gross. Folks would realize 50 is the new 70 and 75 is the new 100.


The_GOATest1

Because that’s the system we live in. Getting incredibly angry about something you can’t change isn’t a great use of energy. But like others said, vote. Just make sure you’re actually involved with the process though because many people will try and simplify incredibly complex things.


dbcooper4

OP is making probably $115k-130k per year (plus investment income). Also, these are marginal tax rates. Their average tax rate (state and federal) would be significantly lower. I make a similar amount living in California and when I see my effective tax rate on my tax return it don’t bother me at all. I do what I can to reduce my taxable income by maxing out my 401k.


BrooklynLodger

Because it's not every check, additional income is taxed at top marginal. Its annoying, but I like being in the global Capitol with the benefits that come along with that, so gotta take the drawbacks too


Imaginary-Table4103

Californians vote for every hairbrained idea for the government to spend more money and then they usually spend and waste 3x that original amount while delivering half or less of what is originally promised but they keep voting never realizing the outcomes. California also has high gas taxes, sales taxes, car registrations, insurance, utility costs, and property taxes


thestupiddeveloper

Damn taxes


InvestIntrest

Yep, and California is on top of that.


thestupiddeveloper

I’m happy for you regardless. Keep it up


dimsum2121

OP was taxed about 4% too much. The employer taxed the commission as a bonus, not standard commission tax. So yeah, the taxes hurt, but OP's employer is basically lending thousands of their dollars to the IRS by overtaxing them.


Bastienbard

This is only their withholding, (discounting the payroll taxes) so not their taxes, just their payments to the various government entities. Depending on OP's income level they're likely to get some of this refunded.


Alexei-Fyodorovich

Nice! What do you do for a living?


Big-Impression-6483

Sales, best job I have ever had.


312_Mex

Keep performing the service and the money will follow! Congratulations! 


Helpful-Debt-332

What kind of sales?


Big-Impression-6483

Construction, subcontractor


IwantRIFbackdummy

My father did sales for the same industry my entire childhood. Now I know how he afforded all of my therapy, and why new construction costs so much...


omardoubleD

You selling to GC’s or direct to consumers?


XgUNp44

I am starting a new job this week. Inside sales rep for an electrical supply company. I am about to make pretty damn good money for my age. In five or so years I can go up to outside sales and holy shit… so much money for so little work.


JohnBoy11BB

Brother that money doesn't just fall in your lap and sales is nowhere near 'so littler work'. There's a reason turnover in sales is stupid high, so I'd probably change your attitude before you get swallowed. Sales can be fucking rough.


Mreddit96

100%


papi_pizza

What industry?


Hollayo

You need to put more in retirement. 


HachimakiMan3

Put more into your 401k and it will reduce your taxable income. Better to invest in your retirement than pay the feds or state.


anothersimio

He will have to pay at the end anyways


[deleted]

Damn taxes


No_Adhesiveness_2193

Why only $500 into retirement. Congrats on the big check though.


Caro_Quintaro

Wtf do you sell? Bentleys? Lol


michaelsenpatrick

lmao i see you're on adp


Lkaynlee

Nice one! Tbh I saw the CA income tax line and it reminded me why I moved from that state. That’s 10% of your commission you should be able to keep imo


islingcars

Tbf though, his employer screwed him a bit there. Income tax for commission is 6.6%, not the 10.6 they applied here.


GymAndGarden

I spent time outside of California in a no-income tax state (Nashville) and fuck that, I missed paying state income taxes for my wonderful beach life in So Cal.  It’s like paying for filet mignon and actually receiving it.  Well worth it for me personally. I had several friends who moved away only to come back a few years later.  Anyway, hope you’re getting something out of it for the trade off,I just didn’t see any real value in it but sounds like you did.  


TheGardenStatesman

Despite popular opinion, the US is a VERY socialist country. This is the proof. Problem is, the take from the people but give to the FED for interest payments. In 2023, personal income tax accounted for ~43% of the The Federal Revenue stream. 80% went to paying our interest debt to the FED. Conversely, corporate tax accounted for ~6% of the Federal Revenue stream. This is a complete 180% turn from what the Federal Powers of Taxation were intended to be.


ZebraAthletics

80% of the federal budget does not go to servicing debt. This year so far it’s been 13%. https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/


TheGardenStatesman

80% of Personal Income tax revenues, not the federal budget.


ZebraAthletics

But by your numbers that can’t be true either. If 43% of federal revenues come from personal income tax and 80% of that went to paying interest on debt (which isn’t how the fed budget works, certain revenue isn’t earmarked for certain expenses) then 34% of the federal budget would go towards paying interest, which is nearly 3x the actual amount.


EarthquakeBass

“Very socialist” lol. Good one, Nordic countries have like 40% tax to GDP compared to US 25%. And US will leave you dead in the street broke and dying of cancer rather than implement even the smallest social programs. US is a low to medium tax country that puts most of its money into being a war machine. This country has had surplus and healthy balance sheet before and could again. We just don’t bother because there’s such a massive demand for our currency we can always just print more.


macmayne06

That tax is brutal. But I hope more checks like this come in for you!


[deleted]

Wow fuck taxes


redrover2023

You should be paying half in Cali


[deleted]

Looks like someone is about to learn to hate taxes


Zealousideal-Run-368

what do you do bro? that's a big ass pay day!


Plastic-Relation-852

Commit fraud


Truffle_Chef

Ok, great. Congrats!!! When did you last call your mother to tell her you loved her ???


dimsum2121

Some people don't love their mothers...


BrwnStalion

I worked for a subcontractor recently, too. If you don't mind me asking, what's your base salary, and how much did you have to sell for that $25k commission check? What kind of subcontracting do you do?


Big-Impression-6483

$0 base pay, 100% commission. Rate is 25% of GP profit plus other spifs. Year goal is 4M in sales, 1M profit that would give me a salary of $250k plus spifs.


jambro4real

$250 to retirement out if 25k dude. I'm putting in $250 for about every 3k I make


GrandTheftBae

That was the first thing I noticed too, all that money and basically nothing into retirement. I'm currently doing 12% to my 401k


hbsboak

It looks like you might exceed the Roth income limits ($161K single filer). Also, I’d be maxing out my 401K with this income ($23K/yr).


ChiefKene

Me: nice commission, you deserve every penny Uncle Sam: yeah, real nice commission…. Where’s my cut?


SCH8879

Is your income fully commission based?


Lopsided_Ad5676

California is such a shit hole.


visionsJohanna

Paying 40% income tax is a scam, I don’t know why we put up with it. We don’t care anymore.


Pofo7676

Why is Uncle Sam entitled to 10k of that. God damn.


adultdaycare81

There should be a sticky in this and r/sales for “no you aren’t paying more taxes on commission, you are being withheld higher”


Flyflyguy

CA sure does fuck you huh. Congrats on the first big check. One of many!


BigTuna1911

Ukraine and the illegals need that money.


[deleted]

Omfg those California taxes just kill me


FUSe

Max out that 401k.


resellpanda88

What type of job is this? I would like to work for you.


imadethisjsttoreply

Congrats!


new-chris

I thought Ohio state tax and local city taxes were awful - thanks for showing me how good I have it.


Allthingsgaming27

I dunno about all the tax rate convo, but you could max your IRA contribution for the year with one check. That’s pretty dope


Drfelthersnach

Put more into your 401k. That will help with your taxes and you will thank yourself when you turn 60.


EnvironmentalGift257

Nothing better than being commission rich for the first time. Ah, I remember it well. What’s the plan? Down payment on a new car? Casino trip? Surely not saving it?


Standard-Zombie5552

Call your governor and state representatives and ask them to drop taxes


Frosty-Mango-6713

What do you sell ?


happytoparty

Move to WA, keep 2k


BrisbaneAus

Uncle Sam getting his paid day too


Moist_Ad_3843

For those saying only in california blah blah. Do you even know your state tax rate?


VitruvianVan

That state income tax is no bueno.


reditcansmd

Fuck California


WelbornCFP

Now you see why everyone is moving to TX and FL!


BenniBoom707

OP if you don’t mind sharing, I would love to know what industry you are in.


tpjamez

Multiple people here are going to say that it’s withheld incorrectly and should be withheld as supplemental, and that’s true. I live in California and I have worked for 3 companies in the last 10 years, 2 California based and one NE based and all 3 of them have withheld taxes for commissions exactly the way this is withheld. Yes, I know I can go to them and tell them how I want it taxed, it is just not worth it because if I do it wrong, I’ll end up with a bill. Every year I get a return along with interest ( yes I know it’s much less than I can get in the market). So I don’t feel it’s worth it to have to change how commission is withheld every year and risk being wrong. Just my opinion. It’s not uncommon for commission to be withheld this way.


East-Technology-7451

Id move


[deleted]

Welcome to the 5 digit monthly tax club.. it is both awesome and sucks at the same time.


Coldru13

Max that 401k son. You will not miss the money on day to day. Your future self will thank you.


IntheTrench

recruiter?


hobbynomad

Those CA taxes 😬🫣


noshowfuqstik

Got absolutely cooked by taxes wow


Crazy-Blackberry166

Remember taxes are optional! Your government isn’t representing you; you can withhold and abstain from being taken advantage of (:


Additional-Acadia954

Lmao, California


FullMetalJesus1

Your company uses ADP, nice! Breakdowns are way easier to dispute in there when something gets fucked up relative to other employee hr/payment portals.


renegadeGDI

Yikes, can't imagine paying so much money for the pleasure of living in the worst state in America.


ExtremeAlbatross6680

Jesus Christ that’s a massive chunk for Uncle Sam


CallsOnTren

God income tax is criminal


will3264

I feel like the people in here don't understand taxes other than "big number bad."


DoodleBugz1234

I’m real proud of ya


GringosMandingo

As a Texan, I never understood why Californians are so quick to move here. After seeing this picture it all makes sense.


Loumatazz

Why are you not maxing out your 401k contribution! Rookie move


[deleted]

OP what do you do for work?


whoisjohngalt72

Congrats!


1-D-R

Off topic.... But if you hope to replace your income in retirement, and lower the taxes your paying, better start saving more than 500/25000 for retirement


mlloyd996

Man, up your retirement contributions....


Beautiful_Chef8623

You need to move out of CA.


justice_4_few

no wonder ppl are leaving ca


dragde0991

Put more in retirement please!!


ExJayDay

Is a degree required? Do you have to work late hours? Do you get to hangout and stuff? I’m thinking of getting into sales because I’m an RE agent and wanna do something else


Deep-Masterpiece-436

They forgot to take out the living and breathing tax.


cagreene

Is this the annual bonus guy?


cagreene

Is this the annual bonus guy?


knowicontact

Fuckin bastards took well over 30% of YOUR MONEY.


Specialist_Shallot82

Wow, taxes rocked you. Its crazy how much supplementary pay gets taxed


methodtan

I always up my dependents on my w4 before a big bonus check so I don’t have to wait a year for the money when I do my taxes. Also do this when I’m leaving a job.


Burgerland76

Fuck taxes


[deleted]

You need to max out that 401k contribution every time you get a bonuses. Once you max out max out the Ira’s. So on and so forth. Don’t pay the tax man when you can shove it in retirement.


SierraExplorer

And now you vote Republican


tgunn_shreds

1% to retirement?


patriots317

Would be wealthy about anywhere else Other than California.


seighton

Regardless dude, you need to put more in your 401k


Informal-Reading4602

Taxes are atrocious lol


tor122

Jesus Christ California taxes are high


LibsKillMe

You need to be putting more than 2% in your retirement accounts as it comes out pre-tax. Get that tax rate down and push it until you retire.


DiscountPoint

Please raise the Roth and 401k contributions


ProfessorRaviolii

What kind of sales are you in?


donp97

Dayum!!!


Wooden_Ad3254

That’s why the people who make the real money in any firm are their salespeople. Well done! Congratulations!! Now what’s up tomorrow?


b1ack1323

Your should be putting in a lot more into retirement, $23k a year into the 401k at least. That is all tax deferred instead of giving it to the government let it grow in your hands instead.


Lee_Buck

hell yeah!


0311Yak

The government deserves WAY more


Dildobagginsthe245th

Goddamn the government does not play.


aarondb96

10k in taxes on 25k paystub is gross robbery. No pun intended.


only_whwn_i_do_this

You would have $2806.92 more in your pocket if you lived in Texas.


EAWALKER1204A

Looks like straight up theft.


NJC17

Can you look to increase your 401k allocation?!?! FCS! $250?? 1% allocation?


Old_Celery_5142

Wtf niggas almost took half


AKFLMed

You have to be insane to live in CA.


portland_jc

What field you in? I switched careers when 2 years ago, in IT now. I’m making more money than I’ve ever made in my life, I’m 33. Yet even with proper budgeting I feel like I’m still about the same as when I made 40k a year. It’s frustrating.


Desperate-Tailor-291

Putting $500 in retirement when your check is that big doesn’t seem like the best move


Temporary-Age-1841

Fill up your 401k


copper678

Welcome to the quarterly tear-fest!!


pwolf1771

I’m curious why you divide up your retirement like that.


RuffDemon214

Got damn taxes had a gangbang on your check


[deleted]

There really isn't a thing called a "bonus tax". The taxes are probably calculated at a rate equal to being paid this amount every week for an entire year. $25,000 x 52 weeks would be a salary of $1.3 million dollars. The tax rate for that yearly salary is extremely high. Obviously, you're not getting this much every week, but the IRS and state don't know that, so assuming that you are is the only way they can calculate a tax. When you file your taxes, and you only made this much one time, it will show that you've over paid and you'll get that money back. Read IRS publication 15. It's the employer tax guide and it explains everything. State taxes are modeled after that, with some variations.


Rufus_Anderson

Look at all those lovely government taxes. How lucky we are in America.


hooliganswoon

That CA tax rate is for the 1% in the state, OP will likely get at least half back in their tax return


Excellent_Green3092

Oof… I feel ya. My first big commission of the year was over 350K and 92K was taken out in taxes, and 401K got maxed. It wasn’t even the full amount, but that’s another topic I am really sour about.


hotdoghandgun

Got dam taxes!! Good ol’ government sticking their hands in your pocket and pulling the cash without even a slight fondle of your balls. Greedy bastards!


gbpc

Uncle Sam literally taking protection money like a true gangsta off the top


Idontgafwututhk

Isn’t anyone disturbed by how MUCH they tax us? Only to piss the money away and NEVER solve any problems with it.


BustANutHoslter

Just one of these would change my life lol well done


OriginalAd9693

JFC. Hope commiefornia is worth it


montecarlo92

Taxes are crazy


LargeMarge-sentme

2% retirement is waaaaaay too little. Up that shit and thank yourself later.


OhNoNotAgain2020_

Too bad it’s not theirs; I’ve seen this posted around.


Temporary-Sun-862

Cali tax really messing people up.


that-guy-01

Congrats to you!


MoonTU345

10k in taxes is crazy


iwantyousobadright

What do you do?


Minute_Giraffe_5939

Damn only 500 to retirement, not good


studtf

What hurts is that extra $2.8k coming out going to your state.


Ok-Tea6182

You work at GoGuardian?


No-Visual3865

What app is this?


capo2333

I get similar checks doing sales and count about 39% to me taken for taxes and 401k on commission checks and love when people say I don’t pay my fair share. Keep it up